Why 2015 Marks a Turning Point for Chinese Brands

Three Chinese Internet Giants Rank in China's Top Five

Chinese brands have "come of age," marketing consultancy Millward Brown and WPP say in a new study. What does that mean exactly?

The Chinese business landscape has long been dominated by state-owned enterprises, from banks to oil companies, but market-driven brands have been growing fast over the past few years. And now three out of China's top five brands are market-driven ones that are not state-owned -- and they're all internet companies.

Tencent is No. 1, Alibaba is No. 2, and Baidu is No. 5 on a BrandZ study of the top 100 most valuable Chinese brands by Millward Brown and WPP. (China Mobile and ICBC bank are No. 3 and 4.) Five years ago, the top five brands, as ranked by BrandZ, were all state-owned.

Now, 47% of the value of the top 100 is market-driven, compared to 29% a year ago. Technology has now surpassed financial institutions to become the highest value category, with 23% of the list's total value.

"Market-driven brands are still relatively young, but their growth rate has been amazing," said Doreen Wang, the global head for BrandZ, the brand equity database. The study says Tencent's brand value has outpaced Facebook's (see infographic).

Researchers ranked brands based on their financials and consumer perception. The study counts only publicly-listed companies. That explains why Alibaba made the list for the first time after its $25 billion initial public offering in New York last year, and why Xiaomi, the world's No. 3 smartphone maker, isn't on it. Yet.

All three of the tech brands in the top five have been trying to internationalize, though they're still not widely known outside their home market, which has 648 million internet users. Tencent's many online services include the chat app WeChat, which has hasn't grown outside China as fast as the company had hoped. Alibaba does e-commerce and got a blast of publicity among investors for its IPO, though few outside China have experienced its services. Search giant Baidu has been pushing into Brazil and has an artificial intelligence center in Silicon Valley.

Two brands in the top 100 get most of their revenue outside China: computer and smartphone company Lenovo (No. 21 on the list), at 62%, and smartphone maker ZTE (No. 48) E, at 53%.

In general, Chinese companies still have work to do promoting their brands overseas. Only 22% of consumers outside China can name a Chinese brand.

For electronics brands like Hisense, Haier and TCL, "they've been very busy making sure their products are on the shelf, but they haven't spent much time executing branding strategy," Ms. Wang said. "It's very urgent for Chinese brands to think about global branding strategy to get consumers familiar with their names."